Memorandum by Nick Lightbody BA (Hons),
Solicitor FRSA (DHB 26)
ENVIRONMENTAL SEARCH SERVICES AND THE HOME
INFORMATION PACK
SUMMARY
The proposed introduction of a compulsory environmental
search will generally be welcomed by solicitors and other practitioners
but the proposed use of the Environment Agency's "Residential
Property Search Report" as the new standard compulsory conveyancing
search is seriously flawed. This is because the information provided
by the Agency's Search does not meet with existing standards nor
comply with established methodologies.
Homebuyers, lenders and their advisors want
the ability to quickly cheaply and easily obtain accurate reliable
and appropriate or relevant information in an easily understandable
form to enable them to decide that there is "no cause for
concern" regarding contamination of the subject property
or, alternatively, establish that there may be "cause for
concern" and decide what steps to take.
The Agency's Search does not provide comprehensive
information meeting established and authoritative guidance and
as such, if it were a compulsory search, and thus likely to be
the only search of environmental matters undertaken, may prove
misleading to homebuyers, lenders and their advisors.
OVERVIEW
This submission deals with the questions relating
environmental searches set out in paragraphs, 5.33, 5.41 and 5.56
of the consultation paper of the contents of the Home Information
Pack.
The government's objective of ensuring that
homebuyers and lenders have access to relevant environmental information
about property being bought is well founded. However, the current
proposals as set out in the consultation document do not reflect
current best practice or the guidance set out in the Law Society's
Warning Card or the Society's Conveyancing Handbook.
The author of this submission, Nick Lightbody,
is a lawyer who has taken a strong interest in the issue of environmental
reporting for property transactions for more than a decade and
has been an active member of the Law Society's Planning and Environmental
Law Committee. He assisted in the preparation of the Law Society's
Warning Card on Contaminated Land and prepares the relevant text
on this issue for the Law Society's Conveyancing Handbook—the
standard text for conveyancers. He is a contributor to Butterworth's
Encyclopaedia of Forms & Precedents regarding environmental
liability and real property. Over the past year he has presented
lectures to hundreds of solicitors all over England on good practice
in conveyancing regarding environmental liability. He believes
that appropriate and relevant clear practical and achievable advice
on good practice regarding environmental liability in property
transactions is essential and will be welcomed by solicitors and
their clients alike.
1. WHAT DO
SOLICITORS AND
THEIR CLIENTS
REALLY WANT?
1.1. Client's seek certainty from solicitors
and view legal fees as a means of guaranteeing, so far as possible,
that they have all relevant information on the matter on which
they are taking a decision. Thus if a problem arises in relation
to a property they have purchased or leased, of which they were
not appraised before proceeding, they will generally look to their
solicitor for, at the least, an explanation.
1.2 Solicitors seek to provide their clients
with the certainty that they seek and, when taking an interest
in real property, such certainty can generally be obtained in
the normal course of a transaction regarding title and matters
registered with the Local Authority. As to matters which were
probably only known to the Seller there is less certainty. Questions
regarding environmental matters, contaminated land, flood, radon,
mining and electromagnetic radiation are generally less capable
of receiving a certain response but are now much more likely to
asked for by the Buyer and asked by the solicitor.
1.3 The solicitor's task in buying real
property is to maximise what the Buyer receives and minimise the
actual and potential liabilities that may detract from their purchase
and both its amenity and value.
1.4 Solicitors want to undertake their conveyancing
work effectively, to give their client a good professional service
complying with legal and professional requirements, and efficiently,
to ensure that they operate their practice profitably.
1.5 Solicitors want their clients to return
with further instructions in the future and to recommend them
to other potential new clients.
2. WHAT DOES
THIS MEAN
IN PRACTICE
REGARDING ENVIRONMENTAL
ISSUES?
2.1 Traditionally solicitors have advised
their clients regarding flood, mining, brine and radon, or have
done so when they thought it relevant. This involved some guesswork
as to relevance since there were generally either no comprehensive
search services available or the cost/inconvenience was such that
such searches were avoided unless there was a good reason to undertake
them.
2.2 The issue of contaminated land started
to became relevant and known within the profession in the mid
1980's following experience in the USA and in Europe. However,
most practitioners were probably not aware of this as an issue
until after the Environment Protection Act 1990 drew their attention
with its provision requiring Local Authorities to inspect their
areas for Potentially Contaminated Land. How this was to be done
was initially very uncertain, as was the likely effect on prices/values
but there was an obvious concern about blight.
2.3 The problem for practitioners was that
there was initially no quick easy and cheap means available of
obtaining information to enable them to advise their clients on
whether or not contamination of land might be an issue. In consequence,
whilst this was increasingly dealt with in commercial transactions
in the residential sector it was generally ignored through lack
of a suitable search service.
2.4 In time, the private sector, from 1992,
started to innovate and develop suitable search services which
were, however, still far too expensive to be contemplated in the
residential sector.
3. HOW CAN
YOU IDENTIFY
LAND WHICH
MAY BE
CONTAMINATED?
3.1 Work was undertaken with the support
of the Department of the Environment in the 1980s, with object
of establishing a methodology for identifying potentially contaminated
land, which included the Cheshire Study undertaken in order, inter
alia, at Executive Summary Para 1 to "evaluate the usefulness
of alternative sources of data and establish[ing] a basic methodology"
[to identify potentially contaminated sites]; at para 4 it states
that "The basic data source should be a comprehensive set
of historical maps, at a scale of 6" to 1 mile or 1:10,000"
and later makes more specific reference to the relevant map series
etc.
3.2 In 1993 the Parliamentary Office of
Science and Technology published its report on Contaminated Land
noting that the "Caveat Emptor" rule seemed likely to
continue (in accordance with the Law Commission's consideration
at that time) and that their principal conclusion was the need
for more information. They noted that the identification and investigation
of contaminated sites should commence with the compilation of
a site history citing old Ordnance Survey mapping as the prime
source of reliable information. This is because Ordnance Survey
mapping has been historically the only comprehensive data gathering
process regarding the use of land at a certain time by reference
to physical location in England and Wales since about 1840. Other
sources are by their nature fragmentary, only recording occupiers
or incidents of which the directory or register creator became
aware.
3.3 In 1994 the Department of the Environment
published CLR Report No 3 (CLR3) regarding Documentary Research
on Industrial Sites which concluded that Historic maps are an
indispensable source of information for research into a site's
history and then discusses the problems to be overcome when using
such mapping for this purpose.
3.4 The recent British Standard BS10175:2001
on investigation of potentially contaminated land specifies the
importance of establishing the history of the site, cites Ordnance
Survey maps as the prime source of information, cites CLR3 with
approval and notes that historic mapping may not represent a complete
record of historical land use. This should not detract from the
fact that they are the best original source that we have available.
4. THE LAW
SOCIETY'S
WARNING CARD
4.1 As a result of increasing concerns within
the profession, and after the new Contaminated Land regime came
into force in England in April 2000, the Law Society issued a
Warning Card in June 2001 advising solicitors that they must exercise
their professional judgement to determine the applicability of
the advice in the Card to each matter in which they are involved.
4.2 The text of the card includes some contradictions
in that it says that it does not constitute a professional requirement
for solicitors yet also says that one must consider the Society's
advice in every transaction. It has been largely interpreted as
resulting in a solicitor, who decides that contamination is not
an issue without undertaking an appropriate search, and without
the client instructing them not to do so, thereby assuming potential
liability for any contamination issues that subsequently arise.
4.3 The private sector had continued to
innovate since 1992 and the first Environmental Data Search at
under £40 appeared in 1999. By October 2000 such a search
could be purchased for £25 and obtained within minutes over
the internet.
4.4 The availability of quick, accurate,
reliable and relevant searches and the publication of the Society's
Warning Card resulted in a massive increase in the use of these
search services by practitioners so that now more than half of
all purchases of registered land are thought to have the benefit
of such a search.
5. WHAT IS
NOW "GOOD
PRACTICE"?
5.1 The majority of purchasers of registered
land now appear to have the benefit of an Environmental Data Search
from a commercial provider.
5.2 In consequence, it is probably now good
practice to undertake such a search in every case. The object
is for the practitioner to be able to report to their client that
there is "No Cause for Concern" regarding potential
environmental liability and thus deal with the purchase secure
in that knowledge.
5.3 The problem facing practitioners until
recently was what to do with the Search Report when it was received?
Interpretation of a 30 page report was not what most solicitors
wanted to do nor felt competent to undertake. The time spent was
unwelcome and reduced profitability. However, the competition
in the private sector, which had earlier driven down prices to
£25 from about £300, again benefited solicitors and
their clients as reports started appearing in October 2001 with
authoritative Certificates on Page 1 resulting in the practitioner
not having to do more than check that the Certificate had been
given in each case.
5.4 These Certificates, if from an appropriate
organisation, enable solicitors to give their clients a degree
of certainty on this issue and have been welcomed throughout the
profession and the lending industry.
5.5 Where a Certificate is not initially
issued further enquiries by the solicitor under the advice of
the Certifier may result in a Certificate being issued in due
course.
5.6 Current Good Practice is commented on
in the current editions of the Law Society's Conveyancing Handbook
and the Society's Environmental Law Handbook.
6. IN THE
LIGHT OF
THE ABOVE
DEVELOPMENT OF
GOOD PRACTICE
WITHIN THE
CONVEYANCING PROFESSIONS
WHAT WOULD
BE THE
EFFECT OF
A NEW
REQUIREMENT FOR
A COMPULSORY
ENVIRONMENTAL SEARCH?
6.1 An accurate reliable and appropriate
compulsory Environmental Liability Search is to be welcomed, and
would be welcomed generally by practitioners, since it would end
the current difficult facing competent practitioners in the residential
sector who are undercut on price by those less competent practitioners
who choose not to undertake such a search.
6.2 An accurate reliable and appropriate
search should be compulsory since without an existing detailed
knowledge of the property going back to 1840 or so it is generally
impossible to ascertain whether or not potential contamination
is an issue without undertaking such a search. The search being
compulsory would avoid the difficult issues facing some practitioners
in the more price sensitive parts of the domestic market.
7. IS THE
SEARCH PROPOSED
BY THE
ENVIRONMENT AGENCY
AND INCLUDED
WITHIN THE
RECENT CONSULTATION
DOCUMENT ON
THE HOME
INFORMATION PACK
ACCURATE RELIABLE
AND APPROPRIATE?
7.1 Unfortunately the answer is a firm NO
for the following reasons:
(a) The means by which one assesses whether
or not land is potentially contaminated in both a practical and
a legal sense is by assessing the existence or otherwise of a
"Pollutant Linkage".
(b) There must be a Source potential contamination
based on the historic use of the land a Pathwaypermeable geology
or appropriate hydro-geology—and a Target—something
or someone which can be adversely affected by the pollution being
communicated to it by the pathway.
(c) The search proposed by the Environment
Agency does not include any comprehensive information regarding
historic land use, merely information that the Agency happens
to hold on its registers. Notably there is no information derived
from historic Ordnance Survey Mapping. Thus there is no attempt
to identify a Source based on reliable and accepted methodologies.
Whilst the Agency search would reveal that it held a record of
relevant information showing that there was cause for concern,
the nature of the Agency's records are not sufficiently comprehensive
nor reliable for showing, as a result of them not having a record,
that there is "No Cause for Concern". This is where
the commercial search services based on Historic Mapping succeed
and the Agency's search fails. Solicitors and their clients want
a reliable answer, so far as such is possible, to the question
"Is there Cause for Concern?" There is no such reliable
answer possible without the comprehensive information derived
from historic mapping.
(d) The search does not include information
regarding the geology and hydro-geology of the land merely whether
or not it is in a Groundwater Vulnerability Area. Thus there is
no attempt to identify a Pathway.
(e) The search does note water abstraction
points but does not otherwise seek to identify potential Targets.
(f) The search offers no interpretation thus
leaving the practitioner to work out for themselves whether or
not the search raises cause for concern.
(g) The proposed search fails to provide
anywhere near the quality of the various recognised commercial
products, from Groundsure Limited, Landmark Information Group
Limited and Sitescope Limited and does not thus serve as a replacement
for any of them. To offer the proposed EA Search as a means of
establishing whether or not there was cause for concern regarding
environmental matters could, or perhaps would, in my view, seriously
mislead members of the profession and the public alike.
(h) The proposed search appears to replicate
the information currently available free from the Agency's web
site and would thus provide a useful free addition to the existing
commercial services.
7.2 It is recommended that a comparison
of the proposed EA search with the current commercial search services
is undertaken by an independent expert in order that the relative
merits of the various Search Services may be assessed on an objective
basis.
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